British business groups are protesting the government’s 'illegal’ shake-up of business rates

Reuters / Suzanne Plunkett LONDON — Some of the UK's biggest business groups have signed a letter condemning the government's "illegal" proposed changes to business rates.

The letter says that one proposed change to regulations will block many businesses from appealing against unfair or incorrect business rates valuations, and could break the law.

It is signed by 13 groups including the British Retail Consortium, the Confederation of Business Industry, and the Federation of Small Businesses (FSB), according to a statement from property consultants Daniel Watney, another signatory.

A government spokesperson told Business Insider that "the claims are simply false."

Business rates are similar the commercial version of income tax, and are levied on firms including shops, cafes, hotels, and hospitals.

The government has proposed a "reasonable professional judgement" provision in draft regulations, which will mean that ratepayers are not allowed to successfully appeal if an incorrect business rates valuation is within a "reasonable margin" of error.

That means that many firms could be left overpaying on their rates bills, and unable to challenge them.

The letter, sent to the Department for Communities and Local Government (DCLG), says that the provision is "potentially illegal" as it does not define "professional reasonable judgement" in the draft proposals, and because the Local Government Finance Act 1988 does not allow the government to forbid appeals on the basis of accuracy.

Previous research into the potential impact of "reasonable professional judgement" by Daniel Watney has found that a 15% margin of error on rate valuations could hit small and medium-sized British business by a total of £700 million a year, according to the statement.

Mike Cherry, FSB chairman, said in a statement to Business Insider: "As business rates bills land in April, it is essential the appeals process is open, fair and workable.

"This clause fails on all three of these tests. It could result in the door being shut on small businesses who want to correct inaccuracies in their valuation and reduce their rates bill.

"We are pushing for the Government to urgently remove this provision, which disproportionately impacts small firms just above relief thresholds."

A government spokesperson said: "These claims are simply false. We are not preventing anyone from appealing their bills, or setting any margin of error for appeals being heard.

"We're reforming the appeals process to make it easier for businesses to check, challenge and appeal their bills, while at the same time generous business rate reliefs mean thousands more businesses are seeing a reduction.